Remember that INTEREST is taxed as INCOME.... and you're adding to your income -- so let's say that you make a $1500 a week... at your regular job...and have withholding at the appropriate tax rate. Now a year goes by and you've added 20 grand in INTEREST INCOME. So be careful of 'bracket jumping' your income!
That's why dividends are so popular - they're not added to your income... and are taxed at a fixed rate of 20%...
72,500 is the top at 15%... make 72,501 and you're now paying 25% on that last dollar earned.
In most states there is also a STATE income tax.... so you've got to factor that in as well.
I'm not arguing against doing this kind of diversification etc... What I'm pointing out to ALL that read - is that don't forget that income taxes play a HUGE roll in your overall investing strategy! Don't overlook them! They will and do, affect your net return.
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